Archives

Obama, Romney ‘Trade Pact’ Malarkey vs. Reality: The Data Is In

October 16, 2012Lori Wallach

One year after passage of the “free trade” agreements with Korea, Colombia and Panama, the latest trade data show U.S. exports to Korea have declined and imports from Korea and Colombia have surged — adding to the job-killing U.S. trade deficit. And, already this year 35 Colombian unionists have been assassinated — more than last year’s horrifying total of 29.

In an election dominated by the urgent agenda of U.S. job creation, it is a sorry statement about the domination of corporate money in American elections that both presidential candidates tout these NAFTA-style “free trade” deals. Repeated polls show that opposition to these NAFTA-style deals is one of the only issues that unites Democratic, Republican and Independent voters.

The candidates’ discussion of these pacts provided a uniquely bipartisan barf-bucket moment. President Obama boasted that the three trade deals “are helping us to double our exports and sell more American products around the world.” Mitt Romney, meanwhile, named further expansion of such trade pacts as the second pillar of his U.S. jobs creation plan.

Yet another month of Department of Commerce trade data, released yesterday, supports the views of a majority of Americans who see these deals as destroying — rather than creating — U.S. jobs.

Obama’s claim that the three trade deals are boosting exports does not survive a basic fact check. To start with, the Panama deal has not even taken effect. And, since implementation of the Korea Free Trade Agreement (FTA), U.S. goods exports to Korea have declined by nine percent (a decrease of over $1.2 billion) in comparison to 2011 levels for the same months, while exports to Colombia since implementation of the Colombia FTA have barely increased (by $358 million). Under the FTAs, the United States has suffered a six percent fall in combined exports to the two new U.S. FTA partners.

Meanwhile, imports from both countries have risen substantially since implementation of the pacts. Neither candidate ever talks about the net effect of these deals, which is the measure that effects jobs and wage levels. But the bottom line is that the combined U.S. trade deficit with Korea and Colombia under the deals has jumped 29 percent above the 2011 levels for the same months.

Using the same ratio employed by the Obama administration, this trade deficit expansion implies the net loss of more than 15,000 U.S. jobs in just the first few months of the new trade deals. As if the loss during the NAFTA-WTO era of more than five million manufacturing jobs (one out of every four this nation had pre-NAFTA and WTO) were not sufficiently devastating for the American Middle Class…

And, yes, in the debate Romney did attack Obama for not doing more of such job-killing pacts quickly enough.

What neither candidate mentioned was that they both support a massive “free trade” agreement now under negotiation called the Trans-Pacific Partnership (TPP). It would contain a broader version of the the NAFTA-style investor rights that promote job offshoring, ban Buy American procurement preferences and roll back financial regulation. TPP talks now include 11 countries, but the deal would be open for China, Russia and other countries to also join. Think NAFTA-on-steroids with the world.

Meanwhile, a year ago today, two-thirds of Democrats in the U.S. House of Representatives opposed the Korea FTA and 82 percent opposed the Colombia FTA — the largest percentages to ever vote against a Democratic president on trade pacts. The Obama administration promised a concrete benefit for each of the pacts on the date of their passage: “greater U.S. access to the Korean auto market, significantly increased labor rights and worker protections in Colombia, and enhanced tax transparency and labor rights in Panama.”

U.S. Auto Exports to Korea Down: According to data released today, U.S. automotive exports to Korea have dropped by $26 million, a seven percent decline, since implementation of the pact, as compared to 2011 levels for the same months. Meanwhile, in the months that the Korea FTA has been in effect, imports of cars and auto parts from Korea have soared $1.8 billion above 2011 levels for the same time period — a 25 percent increase. The U.S. trade deficit with Korea in autos and auto parts has already climbed to $7.9 billion in five months under the Korea FTA — a $1.9 billion, or 28 percent, increase over 2011 levels for the same period.

Unionist Assassinations in Colombia Up: A year after passage of the Colombia FTA and 18 months after the Obama administration announced a Labor Action Plan with Colombia to improve Colombia’s labor protections, Colombia remains the world’s deadliest place to be a union member. In 2011, four of every 10 unionist murders in the world occurred in Colombia, with 29 slain. This year, a reported 35 Colombian unionists already have been assassinated, more than in all of 2011, the year the Labor Action Plan was announced. Sadly, Colombian unions and human rights organizations predicted on-the-ground realities would not change, denouncing the action plan as a series of cosmetic changes. Since implementation of the FTA, imports from Colombia have increased by nine percent relative to the same period in 2011.

Panama Tax Haven Status Continues: To counter criticism that the Panama FTA would assist corporations seeking to dodge U.S. taxes via secretive Panama-based subsidiaries and bank accounts, the Obama administration announced implementation of a Tax Information Exchange Agreement with Panama. However, a large loophole in that agreement allows Panama to sidestep new tax transparency provisions if they are “contrary to the public policy” of Panama, a country that earns much of its revenue by providing strict banking secrecy and tax-free status for foreign firms incorporated there. In June 2012, the Organization for Economic Cooperation and Development, which tracks countries’ tax haven statuses, reported that Panama remains one of a handful of countries in the world that has not passed a first-stage review of its tax transparency measures, due to nearly unparalleled nonconformity on six of nine regulatory checks against tax evasion. Even the Cayman Islands did not earn that dubious distinction. Despite the lack of progress, the Obama administration has indicated its desire to implement the Panama FTA “very soon.”

Corporate donors to both political parties love these deals because they provide new investor protections to offshore jobs and rights to import products that do not meet our safety standards. But, as the government trade data again show, the actual outcomes prove that the majorities of Independents, Democrats and Republicans who think that these deals hurt their families — and the country — have it right.